Warning: JavaScript is not enabled/supported by your browser. This will significantly restrict this sites functionality - please enable JavaScript in your browser or update to a newer browser

We use cookies to make your interactions with our Website easy and meaningful, to better understand your use of our Website and to improve your experience on our Website. By closing this banner you are giving us your consent to do this and you can find out more about our cookies policy and your choices here.

IPO

An IPO is when a business sells shares to multiple investors on the public markets. It allows the business to attract investors, without giving up a controlling stake.

IPOs on AIM help growing businesses operate in more than 100 countries, across 40 sectors, with a combined worth of over £70bn

Key requirement

You must be a well-organised business, which can provide full financial and managerial information

Key benefit

You can access finance over and over again

Key consideration

You must be prepared for the rigour and transparency of life as a public company

What is an IPO (Initial Public Offering)?

An IPO is the first time a business raises finance publically. Before an IPO, a company can only raise funds privately. Going public allows businesses to raise large sums of money from new investors. This means the entrepreneur can retain control of the company, because there are lots of investors with a small percentage of ownership but no majority stakeholders.

An IPO is sometimes referred to as either ‘listing’ or ‘floating’ on the public market. In the UK, public markets sit within the London Stock Exchange.

An IPO is often called long-term, patient capital because businesses can easily raise money time and time again, over years and even decades.

Once a business is a public company, they have to regularly disclose financial information. They must update shareholders and the market with half yearly and annual results.

What are the different IPO markets?

1

Main Market - for larger businesses; home of FTSE 100 and 250

2

High Growth Segment – for tech-specific businesses not quite ready for the Main Market

3

AIM – for smaller, growing businesses looking to scale

The AIM market is the world’s most successful growth market, so it’s suited to smaller businesses looking to scale. AIM has less prescriptive rules than the Main Markets to make sure that businesses can go public and raise finance as easily as possible.

“IPOs give companies credibility, visibility and profile. They’re a stamp of quality, a chance to get your brand out there and an opportunity to make sure everyone knows who you are and what you do.”

Geoff NashCorporate Finance Director @ finnCap

What are the benefits of an IPO?

Long-term finance

It’s easy to raise more money once you’ve listed your business, without having to go through the process again.

Retain control

There’s no minimum ‘free float’ criteria (the percentage of the business put on the market) on AIM. You’ll be notified if one investor tries to buy beyond your pre-set threshold.

Increases brand profile and awareness

Which can help boost sales.

Incentivises staff

With employee share options.

Secondary market for shares

So existing investors can get out.

What are the risks of an IPO?

Return

You may not achieve the valuation you had hoped for.

Costs

There are costs involved in retaining your appointed advisers, including your broker, law firm and PR agency.

Is an IPO right for you?

About your business

Business Stage

Established and growing

Annual turnover

Over £5m; this does not apply to healthcare businesses

Sectors

All sectors; healthcare and tech may be able to list earlier in their lifecycle than other sectors

Regions

All regions

About the IPO

Purpose of finance

Acquisition, product development, new markets

Amount of finance

Up to £200m on AIM; over £1bn on the Main Market

Duration of finance

10 years +

Cost of finance

You will need to appoint your advisers, build your board and spending time professionalising the business ready for public life. An IPO can cost approximately 8% of the amount you hope to raise.

Time to finance

IPO processes take 10-12 weeks; but planning and negotiations can take 12-18 months

Ask a Nomad - what do you look for in a business? - Geoff Nash, finnCap

1

Management and track record

Have they done this before? Have they had success in public or private markets? Have they grown a business? Have they done it well?

2

Financial profile

Is your product commercially viable? Can you prove it? Are you profitable? How much profit?

3

Scalability and opportunity

Does your product or service have national and global appeal? Will it translate into other markets?

IPO considerations

Time

An IPO can take months and sometimes years, so take your time when choosing business advisers. They’ll be with you for the duration of your life as a public company

People

Your CEO and Finance Director will be absorbed by the IPO process for at least six months. The director team will need to keep the business running in the meantime

Life as a public company

Once you have successfully listed, you’ll be subject to transparency and disclosure rules. This means you’ll be required to disclose business information like company wages, finances and tax

Ongoing costs

You will need to retain your Nomad, broker, law firm and PR agency for the duration of the time your business is on the market, so should factor in these ongoing costs

How do you apply for an IPO?

IPOs are often years in the making – and there’s lots of planning to do up front.

Once everything is in place, the process takes between 10-12 weeks.

“The IPO is not the end of the process, it’s the start of your journey as a public company.”

Other finance options

{"mTitle1":"CORPORATE VENTURE CAPITAL","mTitle2":"Investors like","mPara2":"An early stage business - no revenue or profit is needed - willing to give up a share of control.","mTitle3":"You're looking for","mPara3":"£1m+ of finance within 6-12 months of your application for things like acquisition or research and development. ","mCTATxt":"FIND OUT MORE","mCTAUrl":"https://www.british-business-bank.co.uk/finance-hub/corporate-venture-capital"}

{"section1Name":"ABOUT CORPORATE VENTURE CAPITAL","section1CTA":"LEARN MORE","section1URL":"/corporate-venture-capital","section1Rows":{"row1":{"Title":"Purpose of finance","Content":"Acquisition, research and development"},"row2":{"Title":"Amount of finance","Content":"£1m+, depending on business"},"row3":{"Title":"Duration of finance","Content":"3-5 years"},"row4":{"Title":"Cost of finance","Content":"None"},"row5":{"Title":"Time to finance","Content":"6-12 months"}},"section2Name":"ABOUT YOUR BUSINESS","section2CTA":"LEARN MORE","section2URL":"/corporate-venture-capital","section2Rows":{"row1":{"Title":"Business stage","Content":"Any"},"row2":{"Title":"Annual turnover","Content":"Depends on the business"},"row3":{"Title":"Sectors","Content":"All"},"row4":{"Title":"Regions","Content":"All"}},"applyItems":{"item1":{"txt":"view the journey to finance","url":""},"item2":{"txt":"view the application checklist","url":""}}}

{"mTitle1":"VENTURE CAPITAL","mTitle2":"Investors like","mPara2":"Early stage businesses, regardless of whether they have made a profit or revenue, with an annual turnover of less than £3m.","mTitle3":"You're looking for","mPara3":"Significant growth and £1m+ of finance within six to 12 months with the option for multiple funding rounds.","mCTATxt":"FIND OUT MORE","mCTAUrl":"https://www.british-business-bank.co.uk/finance-hub/venture-capital"}

{"section1Name":"ABOUT VENTURE CAPITAL","section1CTA":"LEARN MORE","section1URL":"/venture-capital","section1Rows":{"row1":{"Title":"Purpose of finance","Content":"Acquisition; research and development"},"row2":{"Title":"Amount of finance","Content":"£1m+, depending on funding round"},"row3":{"Title":"Duration of finance","Content":"5-10 years"},"row4":{"Title":"Cost of finance","Content":"None"},"row5":{"Title":"Time to finance","Content":"6-12 months"}},"section2Name":"ABOUT YOUR BUSINESS","section2CTA":"LEARN MORE","section2URL":"/venture-capital","section2Rows":{"row1":{"Title":"Business stage","Content":"Early stage; no revenue or profit needed"},"row2":{"Title":"Annual turnover","Content":"Depends on the business, but is often below £3m"},"row3":{"Title":"Sectors","Content":"All"},"row4":{"Title":"Regions","Content":"All"}},"applyItems":{"item1":{"txt":"view the journey to finance","url":""},"item2":{"txt":"view the application checklist","url":"https://www.british-business-bank.co.uk/finance-hub/venture-capital-checklist"}}}

{"section1Name":"ABOUT ASSET-BASED LENDING","section1CTA":"LEARN MORE","section1URL":"/asset-based-lending","section1Rows":{"row1":{"Title":"Purpose of finance","Content":""},"row2":{"Title":"Amount of finance","Content":""},"row3":{"Title":"Duration of finance","Content":""},"row4":{"Title":"Cost of finance","Content":""},"row5":{"Title":"Time to finance","Content":""}},"section2Name":"ABOUT YOUR BUSINESS","section2CTA":"LEARN MORE","section2URL":"/asset-based-lending","section2Rows":{"row1":{"Title":"Business stage","Content":"Established with assets and a trading history"},"row2":{"Title":"Annual turnover","Content":"Variable – dependant on asset values"},"row3":{"Title":"Sectors","Content":"Any"},"row4":{"Title":"Regions","Content":"Any"}},"applyItems":{"item1":{"txt":"view the journey to finance","url":""},"item2":{"txt":"view the application checklist","url":""}}}

We are a UK government owned business development bank increasing the supply of finance available to growing smaller and medium sized businesses. The British Business Bank is not regulated or authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA).